There have been several changes to long service leave in Victoria in recent years. The most recent came into effect on 1 July 2019 and is in relation to portability of long service entitlements, with the commencement of the substantive provisions in the Long Service Benefits Portability Act 2018 (Vic).

The new Long Service Portable Benefits Scheme (Scheme) affects organisations who engage workers in the community services sector (as well as in the contract cleaning and security sectors). This article focuses on the impact for employers in the community services sector (noting that the rules are slightly different for each sector).

The Scheme is designed to ensure that workers in sectors that are characterised by high rates of casual labour and contract work, still qualify for long service entitlements when they move jobs but stay in the same sector.

From a practical perspective, employees will receive a payment from the Portable Long Service Authority (based on their long service credits), rather than from their employer. This will apply for service after 1 July 2019.

Importantly, however, a not-for-profit (NFP) employer is not required to pay a levy for a worker for a period of service if that worker has an entitlement to long service leave under a Fair Work instrument (being a modern award, an enterprise agreement, a workplace determination, a Fair Work Commission order, the National Employment Standards or a transitional instrument) for the same service period.

How do community service organisations know if they are affected?

Any organisations who hire employees (including casual employees) to do ‘community service work’ may be affected by these changes (whether they are for profit, NFPs or individuals). Understanding what is and is not ‘community service work’ under the Scheme is complex and community service work is defined broadly in the Act. It includes for example, work that provides training and employment support (including employment placement), financial support or goods for the assistance of, accommodation support, home care support services or other support to people with a disability or who are vulnerable, disadvantaged or in a crisis. Community service work also includes community legal services, community education and information services, community advocacy services, community development services, fundraising assistance for community groups, and services providing assistance to particular cultural or linguistically diverse communities.

Importantly, an ‘employer’ for the purposes of the Act is (subject to exemptions including those listed below):

  • a non-profit entity that employs one or more individuals to perform community service work; or
  • an entity for profit that employs one or more individuals to perform community service work for persons with a disability; or
  • a person who is a member of a class prescribed to be an employer for the community services sector.

The Act does not currently apply to licenced children’s services, approved providers under the Education and Care Services National Law (Victoria), activities funded by the NDIS, aged care services operated by a hospital and bush nursing centres/hospitals (however the Regulations propose that the Act will apply to at least some of these organisations from 1 January 2020). There are also some organisations who are exempt from the Scheme including the Commonwealth, the State, municipal councils, public health services, public hospitals and public statutory bodies.

The Long Service Benefits Portability Regulations 2019 (Regulations), which set out the operational details of the Scheme, came into effect on 1 July 2019. The Regulations further define ‘community service work’ (with a long list of services that are prescribed to be community service work) and state that an individual whose substantive role is not predominantly the personal delivery of services, or the personal performance of activities that are community service work, will not be an ‘employee’ of the community services sector for the purpose of the Scheme. In our view, this is likely to exclude some individuals from the Scheme, such as those who perform wholly administrative or managerial roles in community service organisations who might otherwise be captured.

The Act does not currently apply to independent contractors who are engaged by community services organisations, however it does contemplate that the Scheme can be extended by regulations to cover these workers. The Regulations do not currently extend the Scheme in this way.

What must affected organisations do?

Affected organisations must follow the below steps:

1. Register their details with the Portable Long Service Benefits Authority (Authority) Current organisations must register by 30 September 2019 and new organisations must do so within 3 months of establishment. Organisations can register here: https://portal.plsa.vic.gov.au/Public/CompanyRegister.

2. Lodge a quarterly return to the Authority (each January, April, July and October) The return must include information about all workers who have worked during that quarter, their ordinary hours and their pay.

3. Register details of any workers who do not register themselves with the Authority Current organisations must do this by 30 September 2019 (as part of Step 2) and new organisations must do so within 3 months of either establishment or the start of a worker’s employment.

4. Pay a quarterly levy to the Authority (at the same time as they lodge the return at Step 2) The levy is calculated based on the workers’ ordinary pay and it is currently 1.65% for community services organisations.